Dear clients,
On March 3, oil prices experienced a sudden bump, and the reason for this was the Wall Street Journal material about the growing gap between the United Arab Emirates and Saudi Arabia and the possible exit of the Emirates from OPEC.
Officials, in turn, on condition of anonymity, denied the report. The UAE has publicly and privately stated that it is committed to an agreement with other members of the OPEC+ alliance, which will be in effect until the end of this year.
Brent oil futures, initially falling 2.8% after WSJ‘ piece, subsequently cut losses to above $85 a barrel.
Discussions in the UAE about leaving the group were underway two years ago, but the disadvantages outweighed the advantages, according to a source familiar with the position of the Emirates.
Abu Dhabi has been pondering for years which alliances would best suit its long-term interests as it seeks to monetize the increase in production capacity. This project led to a conflict with Saudi Arabia and other OPEC + countries in 2021, which almost split the coalition, but a compromise was found.
If the UAE abruptly leaves OPEC, it could spark political conflict not only with Saudi Arabia, one of its biggest trading partners, but also with other Gulf allies such as Kuwait and Iraq.
